Governor, legislative leaders square off over veto of legislative funding

On September 8th, the Minnesota Supreme Court ruled that Governor Dayton’s veto of the legislature’s biennial appropriation was a legitimate and constitutional use of his executive power. However, the issues surrounding this veto are far from resolved.

Governor Dayton vetoed the legislature’s appropriation in an effort to convince legislative leaders to return to the bargaining table on the omnibus tax bill, which had several provisions that the Governor opposed. One of those provisions eliminated the automatic inflation escalator on the statewide business property tax – NAIOP Minnesota supports eliminating the escalator, which puts state tax increases on autopilot.

Legislative leaders have argued that Governor Dayton could have vetoed the tax bill in its entirety as a method of continuing negotiations. However, the Legislature linked funding for the Department of Revenue’s operations to the tax bill, and Governor Dayton chose to preserve funding of the department’s services. By vetoing only the appropriation for legislative functions (called a line-item veto), he sought to get the legislature’s attention without risking the funding of any state agency.

Legislative leaders also argued that a veto of all funding for the legislature violated the principle of separation of powers. It was clear that the Court had some sympathy for that argument, but was unclear whether they believe the judicial branch has the authority to settle a battle over legislative appropriations. The Court ordered Governor Dayton and legislative leaders to enter mediation to attempt to resolve the dispute, and asked the parties to offer further information and arguments to help settle the different separation of powers issues.

A successful veto doesn’t reinstate the automatic escalator for statewide property taxes and Governor Dayton hasn’t publicly opposed another provision of the tax bill that reduced the impact of the statewide tax on smaller commercial and industrial property. However, any effort to reopen the tax bill puts both laws at risk.